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529 plans are the best way to save money tax-free and spend money tax-free on a child’s college education. But these state-sponsored plans are now delivering an unexpected curveball that you need to know about.

Here’s why it’s dangerous when a grandparent owns a 529 plan

In many families, grandparents will own the 529 plan for the advantage of a grandchild. If that grandchild doesn’t go to school, or they fall out of favor with the grandparents, they can transfer the money to another grandchild. Sounds great, right?

529 plans have been a great tax-planning strategy to move money out of an estate, particularly for wealthy grandparents. You can put up to $70,000 in all at once as an estate planning tool.

But here’s the thing: If a parent owns the 529 plan for the benefit of a child, it will almost never harm that child when they go to qualify for financial aid. But when the grandparent owns the 529, it can wind up harming their grandchild’s financial aid package.

As The Wall Street Journal puts it: ‘Many [grandparents] don’t realize that their efforts can backfire, lowering the amount of financial aid that students receive from the federal government and colleges. In some cases, it can mean a difference of tens of thousands of dollars over the course of four years of college.’

Fortunately, there are a couple of easy workarounds. Grandparents are usually loathe to give up control, but if you trust your son’s or daughter’s money habits, you are best off giving them the money to open the 529 plan.

You can give away $14,000 annually to your kid — if you also include your kid in law, you can do $28,000 — with no estate or tax issues and they use that money to open the 529. They own it and your grandchild is still the beneficiary.

If you as a grandparent already opened and now own a 529, here’s another idea to protect your wallet. The Wall Street Journalsuggests you don’t use any of the money for college expenses until the grandchild is a senior in college. By holding on to the money and throwing it all into senior year, you eliminate the financial aid issue.

Be sure to check out my 529 plan guide for more about how 529 plans work. You can also check to see if your state’s plan is listed on my dean’s list or honor roll!

Clark Howard is a consumer expert whose goal is to help you keep more of the money you make. His national radio show and website show you ways to put more money in your pocket, with advice you can trust. More about Clark